It is safe to say that the Independent Foreclosure Review (IFR) process has been an utter disappointment. The government (specifically the Federal Reserve and Office of the Comptroller of the Currency (OCC)) and 13 mortgage servicers arrived at this most recent $9.3 billion settlement after the IFR failed for two years to get money into the hands of borrowers. Given the failures of the IFR up to this point, we welcome a congressional call for transparency and a robust study of the settlement outcomes. Thankfully, Congressman Elijah Cummings (D-Md.) aims to do that. Last week, he introduced a bill that would ensure proper oversight and accountability of the IFR settlement.
More than four million families have been waiting for answers since the IFR was instituted in April 2011. The IFR was intended to remedy the common practice of servicers signing off on millions of foreclosure documents without reviewing them for accuracy, a practice known as "robo-signing." After two years of independent review, however, no borrower had received any money while the consulting companies that led the review were paid a handsome $1.5 billion. At long last, the OCC and the servicers shuttered the process and are instead issuing cash payments and other foreclosure mitigation support to the victimized families of the robo-signing scandal. The settlement provides direct and indirect aid, but with four million affected borrowers, some families are only receiving $300, paltry relief after wrongfully losing a home.
As outlined in Rep. Cummings's bill, an independent monitor can help rebuild the confidence of the general public in light of significant harm caused by mortgage servicers' robo-signing and the subsequent failed review process. An independent monitor would issue a quarterly report with details on the outcomes of the agreement, including demographic data of the beneficiaries, such as race, gender, geography and property values.
The public -- particularly communities of color who were hit hardest by the housing crisis -- deserve to know how the settlement funds are being spent and whether relief is truly helping neighborhood recovery.
This was first posted to the NCLR Blog.